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CSSB 188(HES): "An Act establishing an education fund and a land endowment for public education; and providing for an effective date."

00 CS FOR SENATE BILL NO. 188(HES) 01 "An Act establishing an education fund and a land endowment for public education; 02 and providing for an effective date." 03 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 04 * Section 1. AS 37.14 is amended by adding new sections to read: 05 Article 7. Education Fund. 06 Sec. 37.14.600. Education fund established. (a) Under art. IX, sec. 18, 07 Constitution of the State of Alaska, the education fund is established as a separate fund 08 of the state. 09 (b) The principal of the fund consists of 10 (1) legislative appropriations to the fund; and 11 (2) gifts, bequests, and contributions of cash or other assets from a 12 person. 13 (c) The net income of the fund shall be determined by the commissioner of 14 revenue in accordance with investment accounting principles and in a manner that

01 preserves the distinction between principal and income. 02 Sec. 37.14.610. Powers and duties of the commissioner of revenue. The 03 commissioner of revenue is the treasurer of the fund and has the power and duty to 04 (1) act as official custodian of the cash and investments belonging to 05 the fund by securing adequate and safe custodial facilities; 06 (2) receive all items of cash and investments belonging to the fund; 07 (3) collect the principal and income from investments owned or 08 acquired by the fund and deposit the amounts in separate principal and income 09 accounts for the fund; 10 (4) invest and reinvest the assets of the fund as provided in this section 11 and as provided for the investment of funds under AS 37.14.170; 12 (5) exercise the powers of an owner with respect to the assets of the 13 fund; 14 (6) maintain accounting records of the fund in accordance with 15 investment accounting principles and with distinction between the principal and 16 income accounts of the fund; 17 (7) engage an independent firm of certified public accountants to 18 annually audit the financial condition of the fund's investments and investment 19 transactions; 20 (8) enter into and enforce contracts or agreements considered 21 necessary for the investment purposes of the fund; 22 (9) report to the board the condition and investment performance of the 23 fund; 24 (10) do all acts, whether or not expressly authorized, that the 25 commissioner of revenue considers necessary or proper in administering the assets of 26 the fund. 27 Sec. 37.14.620. Administration of the fund; fund board established. (a) 28 The fund shall be administered by the Education Fund Board. 29 (b) The Education Fund Board is established in the Department of Education 30 and Early Development. The board is composed of 31 (1) the governor or a designee of the governor;

01 (2) a member of the Board of Regents of the University of Alaska 02 appointed by the governor; 03 (3) the commissioner of natural resources or the commissioner's 04 designee; 05 (4) the commissioner of education and early development or the 06 commissioner's designee; and 07 (5) four public members appointed by the governor; in appointing the 08 public members, the governor shall give a preference to persons who have experience 09 and expertise in 10 (A) education; or 11 (B) private sector resource development. 12 Sec. 37.14.630. Powers and duties of the board. When acting as 13 administrator of the fund, the board shall 14 (1) hold regular and special meetings it considers necessary; the board 15 may hold meetings by teleconference; 16 (2) have the care, control, and management of land selected by and 17 conveyed to the fund by the commissioner of natural resources under AS 37.14.650; 18 (3) keep audio tape recordings of each meeting of the board to be made 19 available on request; and 20 (4) submit to the governor and make available to the legislature by 21 February 1 each year a report describing 22 (A) expenditures made during the preceding fiscal year from 23 the fund that are derived from sales, leases, exchanges, or transfers of the land 24 of the fund or of interests in land of the fund that were selected by and 25 conveyed to the fund under AS 37.14.650; and 26 (B) the annual level of contributions to, income of, and 27 expenses of the fund. 28 Sec. 37.14.640. Uses of fund principal and net income. (a) The principal of 29 the fund shall be retained perpetually in the fund for investment as specified in 30 AS 37.14.610. 31 (b) The net income of the fund may be annually appropriated by the

01 legislature for the support of public elementary and secondary education and for 02 support of the University of Alaska. 03 Sec. 37.14.650. Fund land from Statehood Act land selection conveyances. 04 (a) The board may select and is entitled to receive the conveyance of 5,000,000 acres 05 of land conveyed to the state under Sec. 6(b) of the Alaska Statehood Act (P.L. 85- 06 508, 72 Stat. 339). The board shall annually submit a list of selections to the 07 commissioner of natural resources. If there is disagreement between the board and the 08 commissioner of natural resources about the land selected, the disagreement must be 09 submitted to the governor, who shall make the final decision. The board and the 10 governor shall annually and jointly submit to the legislature, within 30 days of the 11 beginning of a regular legislative session, a list of the selections of land proposed to be 12 conveyed to the fund under this section. Each list must contain not more than 25 13 percent of the total acres of land to which the fund is entitled after subtracting previous 14 conveyances under this section, but not less than 25,000 acres or the remaining 15 entitlement under this section, whichever is less. The legislature may by law approve 16 or disapprove the list of selections submitted to it. A list of selections submitted shall 17 be considered approved for conveyance to the fund if the legislature does not 18 disapprove the list during the legislative session during which the list was submitted. 19 If the amount of land to be conveyed exceeds the balance due the fund under this 20 section, the fund shall set out the land to be conveyed in priority order. Land may not 21 be selected if, on the date of its selection by the board, it 22 (1) has been reserved by law from the public domain; 23 (2) is land 24 (A) included in a five-year proposed oil and gas leasing 25 program under AS 38.05.180(b); or 26 (B) leased under, or for which a lease application is pending 27 under, AS 38.05.180(d) or 38.05.150; 28 (3) is subject to 29 (A) an oil, gas, or coal lease, or coal prospecting permit; 30 (B) a mining claim, offshore prospecting permit, a prospecting 31 site, an upland mining lease, or a mining leasehold location;

01 (4) is necessary to carry out the purpose of an interagency land 02 management agreement; or 03 (5) is subject to conveyance under a land exchange or land settlement 04 agreement. 05 (b) Notwithstanding AS 38.05.125(a), the transfer of ownership and 06 management of land from the Department of Natural Resources to the fund under this 07 section includes the interest of the state in 08 (1) the coal, ores, minerals, fissionable materials, geothermal 09 resources, and fossils that may be in or on the land; and 10 (2) the oil and gas that may be in or on the land, but only as to land 11 that is selected by the board under this section on and after the date that is the fifth 12 anniversary of the effective date of this section. 13 (c) When the board selects the land to which it is entitled under this section, 14 selections must be made in parcels of 640 acres or larger unless the selection is an 15 isolated tract or the commissioner of natural resources finds it is in the best interest of 16 the state to convey less. When the fund becomes entitled to land under this section, 17 the commissioner of natural resources shall convey a document of interim conveyance 18 under (j) of this section or a patent to land. 19 (d) Notwithstanding any other provision of law, for land selected under (a) of 20 this section but not yet patented to the fund or for which a document of interim 21 conveyance has not been issued to the fund under this section, 22 (1) the commissioner of natural resources is authorized to enter into 23 contracts and grant leases, licenses, prospecting sites, claims, permits, rights-of-way, 24 or easements and any interim conveyance or patent shall be subject to the contract, 25 lease, license, prospecting site, claim, permit, right-of-way, or easement, except that 26 the authority granted the commissioner by this subsection 27 (A) is the authority that the commissioner otherwise would 28 have had under existing laws and regulations had the land not been selected by 29 the fund; and 30 (B) may be exercised only if the fund has concurred before the 31 action is taken by the commissioner;

01 (2) income from and management of the land is subject to 02 AS 37.14.680. 03 (e) Unless the governor provides otherwise under (a) of this section, the 04 governor may not include on a list of selections of land submitted to the legislature a 05 land selection made by the fund under this section if the commissioner of natural 06 resources determines that the proposed selection 07 (1) includes land for which, at the time of its selection under this 08 section, 09 (A) a municipality has made a selection under AS 29.65 unless 10 the land selection is, at a later date, rejected by the commissioner of natural 11 resources or relinquished by the municipality; or 12 (B) the commissioner reasonably believes the land may be 13 selected by a municipality under AS 29.65, but the commissioner may not 14 withhold under this subparagraph the conveyance of title to land selected by 15 the fund longer than three years after the date of the municipality's 16 incorporation; or 17 (2) includes land that, at the time of its selection under this section, 18 (A) is subject to an oil and gas exploration license; or 19 (B) the commissioner reasonably believes will be made part of 20 an oil and gas exploration license issued under AS 38.05.131 - 38.05.134; the 21 commissioner may not refuse to convey title to land to the fund under this 22 subparagraph for more than three years after its first selection by the fund. 23 (f) When land is conveyed to the fund under this section, the fund takes the 24 land subject to any possessory interest held by another person on the effective date of 25 the conveyance. 26 (g) In conveying land to the fund under this section, the commissioner of 27 natural resources shall give public notice that substantially complies with notice 28 requirements under AS 38.05.945(b) and (c) and provide for access under 29 AS 38.05.127, but other provisions of AS 38.04 and AS 38.05 do not apply. 30 (h) Land transferred or conveyed to the fund under this section 31 (1) is subject to

01 (A) Sec. 6(i) of the Alaska Statehood Act (P.L. 85-508, 72 Stat. 02 339); 03 (B) art. IX of the state constitution; 04 (C) AS 19.10.010; 05 (D) the payment requirements to the Alaska permanent fund 06 under AS 37.13.010(a) and (b); and 07 (E) the rights of the state under former 43 U.S.C. 932 (sec. 8, 08 Act of July 26, 1866, 14 Stat. 253); 09 (2) excludes any interest transferred to the state by quitclaim deed 10 dated June 30, 1959, under authority of the Alaska Omnibus Act, P.L. 86-70, 73 Stat. 11 141; 12 (3) based on a land selection filed by the fund on or after the effective 13 date of this section and until the day before the day that is the fifth anniversary of the 14 effective date of this section, is subject to reservation by the Department of Natural 15 Resources in perpetuity of all oil and gas that may be in or on the land, together with 16 the right to explore the land for oil and gas and to remove from the land all oil and gas 17 located in and on it. 18 (i) The fund shall bear all costs of selection, platting, surveying, and, except as 19 provided in (k) of this section, conveyance of the land that it selects under this section 20 and, subject to appropriation, shall reimburse the Department of Natural Resources for 21 the reasonable costs incurred by that department relating to that selection, platting, 22 surveying, and conveyance. As to land due the fund under (c) of this section, 23 (1) if the land has been surveyed, the boundaries of the land conveyed 24 must conform to the public land subdivisions established by the approved survey; 25 (2) if the land is unsurveyed, the commissioner shall survey the 26 exterior boundaries of the land to be conveyed without interior subdivision and shall 27 issue patent in terms of the exterior boundary survey within one year of the later of the 28 effective date of the approval by the legislature of the list containing the land or the 29 adjournment of the legislative session during which the list containing the land was 30 not disapproved by the legislature. 31 (j) For land due the fund under (c) of this section that is unsurveyed, pending

01 the survey of exterior boundaries and issuance of patent, the commissioner of natural 02 resources shall, within one year of the later of the effective date of the approval by the 03 legislature of the list containing the land or the adjournment of the legislative session 04 during which the list containing the land was not disapproved by the legislature, 05 prepare and provide to the fund a document of interim conveyance for the land to be 06 conveyed. 07 (k) Except as provided in AS 37.14.680(2), management of land conveyed to 08 the fund by patent or by a document of interim conveyance vests with the fund from 09 the date of recording of the patent or document of interim conveyance. The 10 Department of Natural Resources shall pay the cost of recording all patents and 11 documents of interim conveyance. 12 (l) The board may not make a land selection under this section after 13 December 31, 2012. 14 Sec. 37.14.660. Management and disposition of land. (a) The board shall, 15 by policy, establish procedures for mineral entry or location and mineral leasing on 16 land selections made under AS 37.14.650 that are substantially similar to mineral 17 entry, location, and leasing procedures for state land under AS 38.05.185 - 38.05.275. 18 (b) Notwithstanding other provisions of law, the board shall seek public 19 comment on proposals for development, exchange, or sale of land selections made 20 under AS 37.14.650. The board shall adopt policies that provide that the fund shall 21 prepare an annual plan for management and disposition of fund land under this section 22 and shall, not less than 60 days before scheduled approval by the board of the plan, 23 (1) make copies of the plan available at all legislative information 24 offices and at other locations as the board may designate; 25 (2) publish a notice in newspapers of general circulation in the state 26 that provides the public with information on the locations where the plan is available 27 for public inspection; 28 (3) give notice to all legislators and to local governments with 29 jurisdiction over the land affected by the proposal; and 30 (4) seek public comment on the annual plan before action by the board 31 approving the plan.

01 Sec. 37.14.670. Confidential records. Notwithstanding AS 40.25.110 - 02 40.25.125 and 40.25.220, on a determination that it is in the best interest of the fund or 03 on the request of the person who has provided the information, the board may keep the 04 following confidential: 05 (1) the name of a person applying for the sale, lease, or other disposal 06 of land or an interest in land conveyed to the fund under AS 37.14.650; 07 (2) before the announced time of opening of an offer to purchase, 08 lease, or obtain a disposal of land conveyed to the fund under AS 37.14.650, the 09 names of the participants and the terms of their offers; 10 (3) all geological, geophysical, engineering, architectural, sales, 11 appraisal, gross receipts, net receipts, or other financial information relating to land or 12 an interest in land conveyed to the fund under AS 37.14.650 and considered for or 13 offered for disposal or currently subject to a contract; 14 (4) cost data and financial information submitted by an applicant in 15 support of applications for bonds, leases, or other information in offerings and 16 ongoing operations relating to management of land conveyed to the fund under 17 AS 37.14.650; 18 (5) applications for rights-of-way or easements across land conveyed 19 to the fund under AS 37.14.650; and 20 (6) requests for information about or applications by public agencies 21 for land conveyed to the fund under AS 37.14.650 that is being considered for use for 22 a public purpose. 23 Sec. 37.14.680. Land subject to encumbrances and trespasses. Except as 24 provided in AS 37.14.650(b), for the land selected by the board under AS 37.14.650 25 that is subject to a lease, license, contract, prospecting site, claim, sale, permit, right- 26 of-way, or easement, or to trespass, 27 (1) if the lease, license, contract, prospecting site, claim, sale, permit, 28 right-of-way, easement, or trespass 29 (A) existed before the selection of the land by the board, the 30 general fund or permanent fund, as appropriate, the state is entitled to receive 31 the income obtained from the lease, license, contract, prospecting site, claim,

01 sale, permit, right-of-way, easement, or trespass for the duration of the term of 02 the lease, license, contract, prospecting site, claim, sale, permit, right-of-way, 03 or easement, or of the trespass, and during any renewal of it that is authorized 04 by the lease, license, contract, prospecting site, claim, sale permit, right-of- 05 way, or easement, or by law; 06 (B) did not exist before the selection of the land by the board, 07 (i) the general fund or permanent fund, as appropriate, 08 is entitled to receive the income obtained from the lease, license, 09 contract, prospecting site, claim, sale, permit, right-of-way, or 10 easement, or from trespass before the recording of the conveyance to 11 the fund by the issuance of a document of interim conveyance or a 12 patent; 13 (ii) the fund is entitled to receive the income obtained 14 from the lease, license, contract, prospecting site, claim, sale, permit, 15 right-of-way, or easement, or from trespass on the date of and after the 16 recording of the conveyance to the fund by the issuance of a document 17 of interim conveyance or a patent; 18 (2) the responsibility for the management of the land vests with the 19 fund only upon conclusion of the term of the lease, license, contract, prospecting site, 20 claim, sale, permit, right-of-way, or easement, and any renewal authorized by the 21 lease, license, contract, prospecting site, claim, sale, permit, right-of-way, or easement, 22 or by law, if the lease, license, contract, prospecting site, claim, sale, permit, right-of- 23 way, or easement existed before the land's being selected by the board; if the lease, 24 license, contract, prospecting site, claim, sale, permit, right-of-way, or easement was 25 entered into after selection, then the responsibility for management vests with the fund 26 on the date of recording of the conveyance of the land to the fund by a document of 27 interim conveyance or patent. 28 Sec. 37.14.690. Customary and traditional uses to be continued. When 29 land selected by the fund under AS 37.14.650 has been conveyed to it, before 30 conveying or disposing of an interest in land to a third party, the fund shall manage the 31 land in a manner that permits customary and traditional uses of the resources of that

01 land to the maximum extent practicable. 02 Sec. 37.14.699. Definitions. In AS 37.14.600 - 37.14.699, 03 (1) "board" means the Education Fund Board; 04 (2) "fund" means the education fund established in art. IX, sec. 18, 05 Constitution of the State of Alaska. 06 * Sec. 2. AS 29.45.030(a) is amended to read: 07 (a) The following property is exempt from general taxation: 08 (1) municipal property, including property held by a public corporation 09 of a municipality, state property, property of the University of Alaska, property of the 10 education fund, or land that is in the trust established by the Alaska Mental Health 11 Enabling Act of 1956, P.L. 84-830, 70 Stat. 709, except that 12 (A) a private leasehold, contract, or other interest in the 13 property is taxable to the extent of the interest; however, an interest created by 14 a nonexclusive use agreement between the Alaska Industrial Development and 15 Export Authority and a user of an integrated transportation and port facility 16 owned by the authority and initially placed in service before January 1, 1999, 17 is taxable only to the extent of, and for the value associated with, those specific 18 improvements used for lodging purposes; 19 (B) notwithstanding any other provision of law, property 20 acquired by an agency, corporation, or other entity of the state through 21 foreclosure or deed in lieu of foreclosure and retained as an investment of a 22 state entity is taxable; this subparagraph does not apply to federal land granted 23 to the University of Alaska under AS 14.40.380 or 14.40.390, to other land 24 granted to the university by the state to replace land that had been granted 25 under AS 14.40.380 or 14.40.390, [OR] to land conveyed by the state to the 26 university under AS 14.40.365, or to land conveyed by the state to the 27 education fund under AS 37.14.650; 28 (C) an ownership interest of a municipality in real property 29 located outside the municipality acquired after December 31, 1990, is taxable 30 by another municipality; however, a borough may not tax an interest in real 31 property located in the borough and owned by a city in that borough;

01 (2) household furniture and personal effects of members of a 02 household; 03 (3) property used exclusively for nonprofit religious, charitable, 04 cemetery, hospital, or educational purposes; 05 (4) property of a nonbusiness organization composed entirely of 06 persons with 90 days or more of active service in the armed forces of the United States 07 whose conditions of service and separation were other than dishonorable, or the 08 property of an auxiliary of that organization; 09 (5) money on deposit; 10 (6) the real property of certain residents of the state to the extent and 11 subject to the conditions provided in (e) of this section; 12 (7) real property or an interest in real property that is exempt from 13 taxation under 43 U.S.C. 1620(d), as amended; 14 (8) property of a political subdivision, agency, corporation, or other 15 entity of the United States to the extent required by federal law; except that a private 16 leasehold, contract, or other interest in the property is taxable to the extent of that 17 interest; 18 (9) natural resources in place including coal, ore bodies, mineral 19 deposits, and other proven and unproven deposits of valuable materials laid down by 20 natural processes, unharvested aquatic plants and animals, and timber. 21 * Sec. 3. This Act takes effect on the effective date of an amendment to the Constitution of 22 the State of Alaska relating to education proposed by the Twenty-Second Alaska State 23 Legislature that creates an education fund for public elementary and secondary education and 24 for the University of Alaska.